Indian economy on cusp of big growth phase: Government

New Delhi, July 17 (IANS) The current position of the economy has positioned India on the cusp of a major phase of growth, Minister of State for Finance Jayant Sinha said on Friday.

“We think the economy is now poised for a very big growth phase. Our thinking is investment-oriented. We have brought down inflation. A non-inflationary growth will help us avoid a boom-bust cycle,” Sinha said while addressing chief vigilance officers of state-run banks here.

“With a decisive leadership in place, with the majority that we have in the Lok Sabha and in terms of the policy roadmap that we laid out, it became very clear to domestic investment business people and investors that we were going to, very credibly and in a very thoughtful way, restore the Indian economy to the road path that it should be on,” he added.

Sinha also said that the government is fully committed to supporting the public sector banks.

The Reserve Bank of India said late last month that state-run banks are adequately capitalised, but would need additional funds to comply with international capital adequacy norms in the future.

“Right now the banks are adequately capitalised. That is right,” RBI Deputy Governor R. Gandhi said.

“What we are telling banks and the government is that going forward, keeping in view the future growth that is likely to come in economy and also based on Basel-III norms, additional capital will be needed,” he said, while inaugurating a conference here on “Financial Frauds – Risks and Preventions”, organised by the Associated Chambers of Commerce and Industry of India.

“It is in the government’s realm, we have to pursue it, and they have to bring it to the cabinet and parliament,” Gandhi added.

Finance Minister Arun Jaitley has allocated Rs.7,940 crore in the budget for re-capitalisation of public sector banks during this fiscal.

The union cabinet had in December allowed state-run banks to raise up to Rs.160,000 crore from the capital markets by diluting the government stake in phases to 52 percent.

As per an estimate, public sector banks would need additional capital of up to Rs.240,000 crore by 2018 to meet the Basel-III capital adequacy norms, put in place to guard against a repeat of the situation following the 2008 US financial crisis.